Ollie's Bargain Q2 Earnings Beat, Comps Rise 5%, Guidance Raised

Ollie's Bargain Outlet Holdings, Inc. OLLI reported second-quarter fiscal 2025 results, wherein both the top and bottom lines surpassed the Zacks Consensus Estimate and improved year over year. This Harrisburg, PA-based company delivered strong comparable sales growth and margin expansion, prompting management to raise its full-year outlook. The company’s value-driven model continues to resonate with consumers, particularly in a challenging retail environment.

OLLI’s Quarterly Performance: Key Metrics & Insights

This off-price retailer of brand-name household products reported adjusted earnings of 99 cents a share, surpassing the Zacks Consensus Estimate of 91 cents. Also, the bottom line reflected an improvement from adjusted earnings of 78 cents per share reported in the year-ago period.

Net sales increased 17.5% year over year to $679.6 million, driven by robust new store openings and a 5% rise in comparable store sales. The figure also came in above the Zacks Consensus Estimate of $663 million. Comparable sales growth stemmed from higher transaction counts. Categories like food, hardware, lawn & garden, housewares and domestics were top performers. We had projected comparable store sales growth of 1% for the quarter under review.

Ollie's Bargain Outlet Holdings, Inc. Price, Consensus and EPS Surprise

Ollie's Bargain Outlet Holdings, Inc. price-consensus-eps-surprise-chart | Ollie's Bargain Outlet Holdings, Inc. Quote

What Margins Have to Say About Ollie's Bargain

The gross profit rose 23.9% to $271.3 million, while the gross margin expanded 200 basis points to 39.9%, benefiting from lower supply-chain costs and an improved merchandise margin. We had anticipated a gross margin expansion of 30 basis points. 

SG&A expenses as a percentage of net sales rose 60 basis points to 25.8%, reflecting higher medical and casualty claims as well as increased store labor costs.

Operating income grew 26.7% to $77 million, with the operating margin improving 80 basis points to 11.3%. Adjusted EBITDA climbed 26% to $93.8 million, while the adjusted EBITDA margin expanded 90 basis points to 13.8%. We had anticipated a 20-basis-point expansion in the operating margin, while a 50-basis-point improvement in the adjusted EBITDA margin.

OLLI’s Store Expansion Plans

Ollie's Bargain opened 29 new stores during the quarter, bringing its total footprint to 613 stores across 34 states, reflecting 16.8% year-over-year growth. The company continues to see traction with its Ollie’s Army loyalty program, which grew 10.6% to 16.1 million members. A key highlight was the strong consumer response to its reimagined “Ollie’s Days” event, reinforcing the power of its promotional strategy.

Ollie's Bargain’s Financial Snapshot

Ollie's Bargain ended the quarter with $460.3 million in total cash and investments, marking a 30.3% year-over-year increase. The balance sheet remains debt-light, providing flexibility for growth investments and opportunistic share repurchases. Capital expenditures were $26.4 million during the quarter, while the company repurchased $11.5 million worth of stock, underscoring its commitment to shareholder returns, leaving $304 million under its current authorization.

What to Expect From OLLI in Fiscal 2025?

Encouraged by its second-quarter performance, management raised the full-year guidance. Net sales are now projected in the range of $2,631-$2,644 million, up from $2,579-$2,599 million earlier. Comparable store sales growth is now forecast at 3-3.5% compared to the prior 1.4-2.2%. The gross margin is expected at 40.3%, slightly higher than the prior 40%.

Operating income is anticipated between $292 and $298 million compared with the earlier $283-$292 million range. Adjusted net income is forecast between $233 and $237 million, up from the prior-year estimate of $225-$232 million.

Management envisions fiscal 2025 adjusted earnings in the range of $3.76-$3.84 per share, above the previous outlook of $3.65-$3.75, and up from the adjusted earnings of $3.28 reported last fiscal. Store opening plans were also raised to 85 from the prior 75. Capital expenditures are projected at $83-$88 million, in line with the earlier guidance.

For the third quarter, management projects comparable store sales growth of around 3%, above its long-term algorithm of 1-2%, reflecting continued momentum in the business. Most of the company’s remaining new store openings for the year are scheduled for the third quarter, providing additional sales support. OLLI indicated fourth-quarter comparable store sales to be just below 2%.

Bottom Line

Ollie's Bargain second-quarter results underscore the strength of its value-driven model and disciplined execution, with gains in comps, margin leverage and loyalty growth. With an upgraded outlook, stepped-up store expansion and strong customer engagement, the company appears well-positioned to sustain growth in fiscal 2025, even amid a dynamic retail backdrop.

Shares of this Zacks Rank #2 (Buy) company have risen 17.9% in the past three months against the industry’s decline of 6.7%.

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This article originally published on Zacks Investment Research (zacks.com).

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